to think if you earn over £60,000 and still rent your council home

[RedHelenB]

that in fact it is a lot better than if you had bought it cut price? At least it will go back into the general housing stock when you no longer need it.

www.theguardian.com/society/2008/jun/04/housing

A better explanation of the Southern Cross debacle, for anyone interested.

In the process, it sold most of its property freeholds and then leased them back - "a unique business model borne out of credit euphoria", according to Henry Dixon, fund manager at Matterley.

Rents were inflation-linked - and could only rise. "This looked OK at the time," says William Laing at healthcare analysts Laing & Buisson, but with inflation rising sharply in the past two years, Southern Cross has felt the pinch.

The result is an unsustainable £180m going out each year in rent, which has undermined the company's ability to invest in its homes.

"I thought that generally Mnetters were an intelligent breed and could actually work out that it doesn't cost anywhere near the amount that is charged in rent for council houses to maintain them and they do in fact make a profit for the treasury !!!"

Clearly you don't understand about maximising income. Choosing not to maximise income is giving someone a subsidy. There are plenty of ex council properties rented out privately for far larger amounts than the council rents them out for. Council housing could turn a bigger profit than it does at present. Now that these houses have been built and paid for with state money, prehaps the state could reap the return.

Prehaps extra income from higher rent for affulent tenants could be used to buy more property/ increase housing benefit. Increasing rent for better off tenants would free up council housing. Higher rents would encourage people to downside to a smaller property when their children grow up or move into to private housing.

Social enterprises make money and use that money to help needy people. Social enterprises/ charities usually have a specific aim. For example the NCT charges a huge amount of money for its ante natal classes. The NCT ploughs that money back into community projects to help people who aren't typical NCT type people as well as having burseries for low income families to attend its ante natal classes.

Its not surprising that some people on this thread want cheap rent, whether they need it or not. Its nothing more than sheer greed.

Good grief, floppy. Things may have changed since 2008, but your link is eye-opening:

While many tenants assume that their weekly rents - averaging £72 in London and £58 in the rest of the country - go into a town hall pot to help maintain properties and build more homes, a hefty chunk of their payments, sometimes a quarter and more, is siphoned off by the Treasury.

Over the next three years, to the embarrassment of some ministers, it will make a staggering "profit" of £713m on the back of around 2 million council house tenants in England - £194m in the current year, and climbing to £303m by 2010. The surplus is the result of a complex redistribution system, which all sides accept is well past its sell-by date. Under the system, rent income totalling around £800m will go to the Treasury from English councils this year, while only £600m will be returned or "redistributed". Unbelievably, for many in the social housing sector there is no guarantee that the surplus will be spent on housing rather than being channelled to, say, health, education or transport.

In the same article, proceeds from Right To Buy: Treasury gets 75%, local council 25%.

"Choosing not to maximise income is giving someone a subsidy."

No it's not.

And actually RT, you're not even describing maximising income, and certainly not maximising NET income. You're just talking about maximising price charged.

They're not the same thing.

Actually It appears that Social housing rent revenue is actually being used to subsidise the public purse and not the other way round.....................

"And actually RT, you're not even describing maximising income, and certainly not maximising NET income. You're just talking about maximising price charged."

If a council increases rent then the tenants have a choice: they either move somewhere cheaper or they pay more rent. If a property is over priced then there will be a huge void period and the landlord will lose money. If the property is priced right then the council will increase their net profit.

I feel more sorry for disabled people who have been hit by the bedroom tax than well off people who don't want a rent increase. The public purse is empty at the moment and I think its fair to use income from rent revenues to REAL allievate housing need.

joysmum and all the other buy-to-letters

You say you are not making any profit from renting, but that "the property will provide a pension when you come to sell it."

How much would you have to pay every month into a pension fund to get the kind of lump sum payout that you are expecting from selling the property?

That's how much profit you are making every month.

Reallytired you say if you and the other buy-to-letters were forced to charge lower rent then you'd sell the property and then there'd be nowhere for people to live.

Who do you suppose would buy the property? Well you'd have to reduce the asking price until someone offered to buy.

Either landlords who are prepared to charge lower rent, or people who are currently renting because they can't afford to buy.

Supply and demand in practice.

"You say you are not making any profit from renting, but that "the property will provide a pension when you come to sell it."

How much would you have to pay every month into a pension fund to get the kind of lump sum payout that you are expecting from selling the property? "

The profit is made from renting when the repayment mortgage is paid for and ofcourse appreciation in the value of the property. In the short term the landlord just covers the costs. Once the mortgage is paid then it becomes a source of income or an asset that can be sold. If you owned a 200K property outright it can give an income of 6K and you can leave it to your children. Alternatively you could buy 11K annuity for 200K.

To have a private pension of 11K you need to put away 6K per year of working life. If you can afford the desposit for a buy to let then you can get a tenant to pay the mortgage. At the end of the mortage you can buy annuity if you want guarenteed income.

So ReallyTired effectively on a £200k buy-to-let you are making 6k profit per annum.

How much deposit would you need, say 50k ? 6k profit on a 50k invested, a massive 12% annual return.

[Apologies pound sign not working on keyboad]

This illustrates the point that landlords are making huge profits out of high rents, which in many cases are paid by @the taxpayer@ in the form of housing subsidy.

[now the apostrophes aren't working either]

Ooops, if you don't count the increase in the value of the house, I have exaggerated the profit a bit because you don't get 12% until the mortgage is paid off.

But if you include the appreciation of the house, that would more than cover the interest you could otherwise have been getting on the deposit.

Ofcourse landlords make money and my tenant pays for her luxury flat herself. She is not dependent on state handouts and has an extremely well paid job. It might shock you, but she doesn't want to buy her own place nor does she want to live in a council owned shithole. Many people in their twenties want the flexibility of renting. It makes financial sense to rent if you are living in an area short term.

"This illustrates the point that landlords are making huge profits out of high rents, which in many cases are paid by @the taxpayer@ in the form of housing subsidy."

Very few landlords accept housing benefit. I have never had anyone one housing benefit show an interest in renting my flat. It is totally out of their league. I would be prepared to rent to someone on housing benefit if they had a guarenteeor.

Is some communist going to come on this thread and say its unfair that well off people live in nicer houses/ flats than the poor.

Most people do not have the option of council housing because they don't have enough points. (Ie. they are not a single mother on income support who has been kicked out of their previous accomdoation)

You do know if that single mother (or any other person) had been kicked out due to their own actions e.g any reason other than the ll wanting it back or just not renewing. They would not be housed, it's called being intentionally homeless

And I'm not even going to bother telling you about rental surplus as you wouldn't believe me,because you don't want to.

There are quite a lot of respectable reasons why a single mother might find herself homeless. For example I have a friend who was kicked out by her own parents because they didn't like being woken in the night by the baby. She had to live in a b and b for three months until she was re housed by the council.

As far as rental surplus goes, I think the bigger the profit the better. That profit can be ploughed into helping people like my friend who were young and truely desperate. I would like to see more help for disabled people who have suffered with the bedroom tax.

We need to find imaginative ways of increasing housing stock for people on low incomes. At the moment agencies take a large proportion of private rental. If a council could guarentee that a landlord got a low rent (say £500 instead of £800) and that maintaince expenses were covered then it would increase the pool of low rent properties. The council has lower maintaince costs than a private landlord because they employ all their own gas engineers, electricans and plumbers so maintaince costs could be covered by charging the tenant say £550 a month.

Most of the tradespeople are contracters

YANBU. I think there was even a study a while back which showed council housing was one of council's most profitable activities, so if anything they should be trying to get more people into it not fewer. Also with the way council housing is, in big schemes usually and sometimes a bit isolated from 'normal' housing, it's better to get some social diversity surely, rather than just having everyone really poor in one place so it causes social tension and stress on services? Not that rich people are usually less criminal, but at least if they are paying full council tax and things too hopefully that goes into local services rather than them all living somewhere posher and the money going there too.

I have an issue with it because it's unfair to everyone who has the same salary but is renting privately. Council houses should only be for the poor or people on very low wages as they are the ones who need them most.

Alternatively, good quality, affordable rental housing should be available to as many people as possible, in whichever sector.

Council rents are not subsidised.

OK, in that case it's easily possible to create huge amounts of extra council housing. Councils buy up every private property that comes on the market, borrowing money to do so. They let the properties at typical council rents, out of which they pay for the loans and for maintenance, just like private landlords.

Clue:- if above doesn't actually work, when you run the numbers, it's because the premise was false.

Further clarification for the really hard of thinking: the premise is false.

Councils don't have spare cash to buy up housing. It would be lovely if councils could buy up houses of people who are at risk of repossession so that people were not made homeless. However that is simply not going to happen.

Private landlords make their money in twenty years time when the mortgage is paid. In the short term they cover their costs. If councils were to buy up properties then they would have to charge more rent to cover their loans.

"Alternatively, good quality, affordable rental housing should be available to as many people as possible, in whichever sector."

I completely agree with you. What is affordable to a single mother on benefits is not affordable to someone on 60K. People who earn well can afford to pay realistic rent.